February 3, 2022What Came First – the Labor Shortage or Supply Chain Challenges? Understanding how to build a modern supply chainSupply chain management in 2022 looks nothing like it did in 2019. A collision course of the pandemic, trade wars and tariffs, Brexit, the IoT boom, natural disasters, ecommerce and home delivery expectations, the semiconductor chip shortage, and labor shortages have forced a rethink in the how and what of supply chains. A lot of ink and airtime has been devoted over the last two years to discussing the supply chain and how to fix it. The reality is, there is not one simple answer to address the depth of underlying challenges slowing and disrupting the supply chain.However, the root of supply chain challenges can be traced back to one core issue: a lack of skilled labor. The jobs are there. The trucks are waiting to be driven. Products are waiting to be packaged and distributed. Parts are waiting to be assembled. People are at home buying and waiting for their purchases. But there is no one available to do the skilled work that manufacturers, wholesalers, third-party logistics companies, retailers, and service providers depend on to keep the cogs in the supply chain moving.Consider these examples from a recent Forbes article:An Arkansas manufacturing company owner said her company has had trouble hiring factory workers.An equipment wholesaler covering the Pacific Northwest market has 15 openings for warehouse workers and drivers across all his locations. His suppliers blame their backorders on the labor shortage.A Washington state credit union president named staffing as his organization’s top challenge. An Iowa banker reported more job openings than ever before and that their clients include four companies that could each hire 50 people, if only 50 people would apply for the jobs.Forecasters suggest that by 2030 there will be 2.1 million unfilled manufacturing jobs, and this will ultimately cost the U.S economy $1 trillion. It is time to think beyond traditional ways of getting the work done. Yes, automation and technology can and should be exploited to their maximum capabilities (and future potential) to support new ways of planning, creating, designing, moving, packaging, delivering, and distributing goods and services. The Five Principles of Supply Chain Management in 2022Supply Chain OperationsReference (SCOR) ModelWhile there are many different supply chain models in practice today, the five core principles of supply chain management are universal across all models. 1. Planning. Efficient and predictive planning is essential to ensuring manufacturing, inventory, warehousing, and operations have the resources required. 2022 Challenge: However, it’s hard to plan and predict demand when the manufacturing, sourcing, delivery, and return stages of the supply chain are overwhelmed or simply not functioning.2022 Solution: Predictive technologies including machine learning, artificial intelligence, big data, lean six sigma and just-in-time supply chain management can provide the visibility and knowledge needed to strengthen planning and logistics, and identify gaps that can be filled with new approaches to how work gets done.2. Sourcing. Reliable and sustainable partnerships with parts suppliers, manufacturers, vendors, and others is critical to the design, production, assembly, packaging, and distribution of goods and products. 2022 Challenge: Making this work comes back to people. Suppliers, vendors, partners, and manufacturers rely on a limited pool of people to design, manufacture, and deliver their products. 2022 Solution: Autonomous mobile robots (AMRs) and other types of automation can help these companies fill the glaring gaps in their manufacturing, warehousing, and operational processes.3. Making. The design and production of the screws used in the door frame of a car to the assembling of the final car and packaging it for delivery are all part of the making process. As soon as one aspect in this complicated dependency falters, every stage of the supply chain is in jeopardy.2022 Challenge: Planning, sourcing, making, and delivering cannot happen efficiently when the components and parts are not available. 2022 Solution: Using AMRs to move products, upskilling existing employees, taking advantage of predictive technologies, and using lean six sigma principles can improve efficiencies.4. Delivering. A productive supply chain depends on delivering goods, parts, and products to the companies and people who want them. 2022 Challenge: Congested ports, trucks stranded with no one to drive them, the impacts of climate change on traditional methods of moving and delivering goods, through to the spike in ecommerce and same-day delivery demands – all underscore a deep need for improvement in the delivery stage. 2022 Solution: Reallocating skilled employees to other jobs and using autonomous forklifts to automate multiple jobs in daily operations – including moving pallets from dock to dock and in between – is just one example of how the delivery stage in a supply chain can be strengthened.5. Returning. B2B and B2C customers do return products – this occurs for multiple reasons, including not having the ability to use the parts, products, and components they purchased. 2022 Challenge: Returns may happen due to delivery delays caused by planning and sourcing issues higher up in the supply chain. Returns may happen because further down the supply chain there is insufficient labor to assemble and deliver the finished product and use the purchased parts. Returns may happen because the initial planning was incorrect or unable to adjust to interruptions in sourcing and delivery. 2022 Solution: Using big data and predictive technologies to provide smarter visibility into the supply chain can help mitigate returns. Additionally using AMRs and automation to do the work that supports the planning, sourcing, and delivery can help prevent returns and manage returns when they cannot be prevented.Every single supply chain depends on people to make it work. Whether it’s planning, sourcing, making, delivery, or returning – people are critical to supply chain success. The challenge now is in acknowledging that while the jobs are available – the people are not. This means companies need to pivot again and look for new ways to get work done.Building a Modern Supply ChainTo really drive change within your supply chain processes and overall operations, it helps to have a firm understanding of the realities of the labor shortage.Do not overlook these facts:Surveyed U.S. manufacturers believe that finding the right talent is 36% harder now than it was in 2018. 19+ million U.S. workers have quit their jobs since April 2021.53% of employers said they are dealing higher rates of voluntary turnover, with 64% stating they expect this challenge to worsen over the next 6 months.36% of surveyed employees are quitting their jobs without having another job lined up.500,000 open manufacturing positions according to July 2021 survey results.77% of surveyed manufacturers say they are struggling to hire and retain employees.This is just a small sample of the data facing employers across the U.S., highlighting a stark reality across all segments of the supply chain. Solving the labor shortage in manufacturing and warehousing operations requires companies to use modern-day technologies and processes throughout every stage of their supply chain:Use AMRs. AMRs such as forklifts and pallet movers give companies the capabilities, they need to operate a resilient supply chain:Plan – know manufacturing and operations can handle increases in demand and labor shortages. AMRs can operate 24/7, freeing skilled employees for other high-demand jobs.Source – be a reliable vendor, partner, or supplier for companies who rely on your parts and products – know you have the technology to move, distribute, and receive parts and products. Make – making products and components depends on having access to source materials. AMRs can be used to speed the movement of materials, products and components from manufacturing to distribution.Deliver – AMRs make it possible to maintain a consistent process of picking, packing, loading, unloading, and distributing parts and products. Return – when products are returned, AMRs can be tasked with the receiving and distribution of these products – eliminating the dependency on an already stretched labor force.Use autonomous vehicles. Whether it’s self-driving construction equipment, autonomous trucks, or autonomous last-mile delivery – these applications of autonomous technology make it easier for manufacturers and other companies to reliably deliver their services and products. Use additive manufacturing. Gives companies the capability to print parts and materials on an as-needed basis – eliminating the need for multiple warehouses stocked with legacy or obscure parts. AMRs and autonomous vehicles can be used within additive manufacturing sites to speed the delivery and distribution of these in-demand parts (strengthening relationships with customers and partners).Use Industry 4.0 and beyond technologies. Machine learning, artificial intelligence, IoT, big data, 5G, 6G, and more give companies the visibility they need to improve planning, sourcing, making, delivering, and accepting returns. Coupled with this is deploying AMRs with minimal notice to fill anticipated gaps or to quickly respond to unexpected surges in product demand or labor shortages.Use lean six sigma: the principles of lean six sigma and focusing on continuous improvement strategies give companies the tools, capabilities, and insights to respond to the chaotic nature of global supply chains. This can range from using AMRs to eliminate waste in the movement and distribution of goods or using autonomous robots and predictive technology to capitalize on opportunity. The big unknown in manufacturing and operations is having consistent access to people and labor. The best possible solution right now to create a stable and resilient supply chain is changing the way parts, products, and goods are moved and distributed.AMRs are a key part of this solution – giving companies a reliable, safer, and more cost-effective way of managing their warehousing and distribution strategies. Supply chain management has come a long way in the past two years. We’re excited to see how companies continue to adjust and recalibrate their internal processes so they can deliver on corporate goals and meet customer demands. Contact us to learn more about the role of AMRs in helping to solve the labor shortage facing manufacturing and warehousing operations.